Pier 1 Imports Q2 Results Miss View, Trims FY14 Earnings Forecast

(RTTNews) - Pier 1 Imports Inc. (PIR), a specialty retailer of decorative home furnishings and gifts, reported Thursday a decline in second-quarter profit due to margin pressure, despite higher comparable store sales. Earnings per share as well as top line missed analysts' estimates. The company also trimmed its forecast for fiscal 2014 earnings per share below consensus.

In pre-market activity, shares declined $2.76 or 11.69 percent to $20.84.

For the second quarter, net income declined to $17.83 million or $0.17 per share from last year's $26.23 million or $0.24 per share. The previous year's adjusted net income was $20.7 million or $0.19 per share. On average, 12 analysts polled by Thomson Reuters expected earnings per share of $0.21 for the quarter. Analysts' estimates typically exclude one-time items.

Total sales increased 7.6 percent to $395.64 million from last year's $367.62 million, whereas 11 analysts estimated revenues of $404.64 million for the quarter. Comparable-store sales increased 3.5 percent in the 13-week period, compared with the prior year's gain of 6.7 percent.

Gross profit increased to $161.3 million from last year's $151.5 million, while gross margin declined to 40.8 percent from 41.2 percent a year ago.

Meanwhile, operating income decreased to $29.1 million or 7.3 percent of sales, from $32.3 million or 8.8 percent of sales, last year.

President and Chief Executive Officer Alex Smith said, "During the second quarter, the efforts focused around our short- and long-term goals fell slightly out of balance. In particular, our marketing initiatives did not include appropriate messaging around clearance and promotional activity in our stores, or customer acquisition generally, which contributed to lower than expected store traffic."

Looking ahead for fiscal 2014, on a comparable 52-week basis, Pier 1 now sees earnings per share in the range of $1.23 to $1.29, versus its prior expectation of $1.27 to $1.32 range. The revised forecast represents a 5 percent to 10 percent increase in earnings from last year. Analysts project earnings of $1.31 per share for the year.

For fiscal 2014, total sales growth is projected to be in the high single-digit range, with comparable-store sales growth still expected to be in the mid single-digit range.

Earnings before interest, taxes, depreciation and amortization or EBITDA growth for the year is now expected in the range of 12 percent to 16 percent, compared to previous guidance of 15 percent to 18 percent.

Smith concluded, "We've entered the third quarter with a very clean inventory position and a terrific assortment of fall product newly set in the stores. Customers are responding favorably to both regular and seasonal merchandise..."

The company added that it remains solidly on track to achieve the goals laid out under Three-Year Growth Plan.

Pier 1 shares closed Wednesday's regular trading session at $23.60, up $0.15 or 0.64 percent. In the extended trading, shares gained 0.64 percent further to $23.75.